A breathable fabric Working within W.L. Gore Associates Non-hierarchical corporate culture

1. Lecturer: Sergio Pinzon
Gore-Tex and W.L. Gore & Associates: An innovative
company and a contemporary culture

2. Introduction
This case study explores the role of organisational
management and culture within a very innovative firm,
which is responsible for some very well-known products
such as the famous Gore-Tex fabric, and yet few people
know very much about this remarkable organisation. It is
operated in a similar way to that of a co- operative such as
the John Lewis Partnership in the United Kingdom, where
the employees are also owners. In addition, the organisation
seeks to minimise management with the emphasis on action
and creativity. Today this enigmatic firm employs
approximately 7,000 people in more than 45 plants and
sales locations world-wide. Manufacturing operations are
clustered in the United States, Germany, Scotland, Japan
and China. Proprietary technologies with the versa- tile
polymer polytetrafluoroethylene (PTFE) have resulted in
numerous products for electronic signal transmission;
fabrics laminates; medical implants; as well as membrane,
filtration, sealant and fibres technologies for a range of
different industries.

3. Introduction
Today the organisation divides its
products into four main groupings:
medical products; fabric
products; electronic products;
and industrial products. Gore has
approximately 650 US patents and
thousands world-wide. Further
details of these can be found by
visiting the US Patent & Trademark
office website at www.uspto.gov
This Photo by Unknown Author is licensed under CC BY-SA-NC

4. Background
W.L. Gore & Associates is probably best known in Europe for its Gore-Tex product (that
piece of material in your coat that keeps you dry yet allows your body to breathe), yet few
people know very much about this privately owned and relatively secret company. Fewer
still realise the very innovative and contemporary way the organisation is run – it seeks to
have an ‘management style’. Annual revenues top $1 billion. W.L. Gore is a privately held
company ranking in the top 200 of the Forbes top 500 privately held companies for 2002.
Indeed, W.L. Gore would rank in the Fortune 500 companies in terms of profits, market
value and equity value. Given that the firm is a privately held corporation many details of
the company’s operations and strategies are not widely known. Unlike publicly listed firms
it does not need to share information on such topics as marketing strategies,
manufacturing processes or techno- logy development. The company is owned primarily
by its employees (known as associates) and the Gore family. W.L. Gore enterprises is
comprised of more than 7,000 associates at over 45 locations around the world.

5. Background
W.L. Gore & Associates was founded in 1958 in Newark,
Delaware, when Bill and Vieve Gore set out to explore
market opportunities for fluorocarbon polymers,
especially polytetrafluo- roethylene (PTFE). First
developed by Bill Gore when he worked as a scientist for
the Dupont Corporation. Gore could not get anyone at
Dupont to invest in his new idea, so he bought the patent
and went into business on his own. Within the first
decade alone, W.L. Gore wire and cables landed on the
moon (the firm supplied cables for the 1969 lunar
missions); the company opened divisions in Scotland
and Germany; and a venture partnership took root in
Japan.

6. Background
W.L. Gore has introduced its unique technical
capabilities into hundreds of diverse products. It
has defined new standards for comfort and
protection for work-wear and active-wear (Gore-
Tex); advanced the science of regenerating tissues
destroyed by disease or traumatic injuries;
developed next-generation materials for printed
circuit boards and fibre optics; and pioneered
new methods to detect and control
environmental pollution.

7. Gore-Tex, a breathable fabric
In 1969, Bob Gore discovered that rapidly stretching PTFE
created a very strong, micro- porous material (this became
known as expanded PTFE, or ePTFE), which offered a range of
new, desirable properties. To be effective a waterproof fabric
needs to be able to prevent moisture get- ting from the
outside to the inside. Furthermore, a waterproof fabric must
have the ability to with- stand water entry in active conditions
such as walking in wind-driven rain and sitting or kneeling on
a wet surface. In the case of garments for wear especially in
active conditions, perspiration is a common problem.

8. Gore-Tex, a breathable fabric
If perspiration vapor becomes trapped inside our clothing, it can con- dense into liquid
moisture that causes dampness – and wet heat loss is 23 times faster than dry heat
loss. A fabric that would enable moisture to escape and at the same time prevent
moisture from entering would seem unachievable, but that is precisely what the Gore-
Tex® fabric does. Raincoats incorporating the Gore-Tex® fabric were first introduced
way back in 1976, hence the patent for the breathable fabric expired in 1996.
However, new patents are still active on improved methods of making Gore-Tex®
fabric. There are now many generic versions of breath- able fabric on the market. The
success of the product has largely been witnessed in the 1990s as outdoor pursuits
grew rapidly in popularity during this period. This led to an explosion in sales of
Gore-Tex related products, such as coats, back-packs, shoes and trousers.
Indeed, clothing manufacturers who used the Gore-Tex fabric in their garments, such
as Berghaus, Karrimor and North Face, became household names as this once
esoteric specialised clothing market became mainstream.

9. Working within W.L. Gore Associates
The very unusual organisational structure and management sets this firm
apart from its competitors. Moreover, there is some evidence to support
its claim to be highly creative and innovative as Gore – US has made all
six annual lists of the ‘100 Best Companies to Work for’ in Fortune
magazine from 1998 to 2003. Its UK firm was ranked among the ‘100
Best Places to Work in the U.K.’ (McCall, 2002). Gore – Italy ranked
among the ‘35 Best Places to Work in Italy’ (2003). Gore – Germany
ranked among the ‘50 Best Places to Work in Germany’ (2003). It is often
cited as a model for effective management of innovation, and the firm is
proud of its heritage and how it works.

10. Non-hierarchical
corporate culture
The firm’s unique structure was born out of Bill Gore’s frustration with a large
corporate bureaucracy; the W.L. Gore culture seeks to avoid taxing creativity
with conventional hierarchy. The company encourages hands-on innovation,
involving those closest to a project in decision making; hence decision
making is based on knowledge rather than seniority. Teams organise around
opportunities and leaders emerge based on the needs and priorities of a
particular business unit. To avoid the traditional pyramid of bosses and
managers, Bill created a flat lattice organisational structure in which there
are no chains of command and no pre-determined channels of
communication. Instead, employees communicate directly with each other
and are accountable to fellow members of multi-disciplinary teams. The
company bases its business philosophy on the belief that given the right
environment, there is no limit to what people can accomplish.

11. Non-hierarchical
corporate culture
The formula seems to have worked. In 40 years of business, W.L. Gore &
Associates has developed hundreds of unique products that reflect an underlying
commitment to fluoropoly mertechnologies. The company is passionate about
innovation and has built a unique work environment to support it based on a
corporate culture that encourages creativity, initiative and discovery.
The last principle is meant to protect the company from inappropriate risk. While
employees are given wide latitude to pursue entrepreneurial opportunities, no one
can initiate projects involving significant corporate financial commitments without
thorough review and participation by qualified associates.

12. Employee ownership structure
The goal of Gore’s highly flexible and competitive programme is to maximise
freedom and fairness for each associate. The benefit plans con- sist of core
benefits and flexible benefits. Core benefits are basic plans and services
provided by Gore to all eligible associates. They include an Associate Stock
Ownership Plan, vacation, holidays, profit sharing, sick pay, basic life
insurance, travel accident insurance and adoption aid.
The Associate Stock Ownership Plan (ASOP) is the most valuable financial
benefit. Its purpose is to provide equity ownership, and through this
ownership, to provide financial security for retirement. All associates have
an opportunity to participate in the growth of the company by acquiring
ownership in it. Every year W.L. Gore contributes up to 15 per cent of pay to
an account that purchases W.L. Gore stock for each participating associate.
W.L. Gore contributes the same percentage of pay for each associate active
in the plan. An associate is eligible for this benefit after one full year of
employment and qualifies for full ownership of their accounts after five years
of service, when they are fully vested. Valued quarterly, W.L. Gore stock is
privately held and is not traded on public markets. The ASOP, although it
does not own all of the W.L. Gore shares, does own a majority of them, with
the remainder owned by the Gore family.

13. Employee
ownership
structure
Associates also qualify for cash profit-sharing distributions when corporate profit
goals have been reached. Profit-sharing distributions typic- ally occur an average of
twice a year. In addition, each pay period associates are provided with pre-tax
benefits, called flex dollars, to use for the purchase of ‘flexible benefits. These
include medical plans, dental plans, long-term disability insurance, personal days,
supplemental individual life insurance, family life insurance and health care or
dependent care spending accounts

14. Unique characteristics
of ownership culture
W.L. Gore believes that given the right environ-
ment, there is no limit to what people can
accomplish. That is where the W.L. Gore lattice
system comes in to play. It gives the associates the
opportunity to use their own judgement, select their
own projects and directly access the resources they
need to be successful. Another unique aspect of the
lattice system is the com- pany’s insistence that no
single operating division become larger than 200
people in order to preserve the intimacy and ease
of communica- tions among smaller work groups.
As divisions grow, they are separated into
constituent parts to preserve that culture.

15. Conclusions
=This case illustrates some of the organisational characteristics that are necessary for innovation to occur. The
unique organisational model seems to work for W.L. Gore. It is certainly contemporary and does seem to help to
unleash creativity and to foster teamwork in an entrepreneurial environment that seeks to provide maximum
freedom and support for its employees (associates). Many of the organisational characteristics are not, however,
unique to W.L. Gore and there are many other firms where these characteristics can be found, such as 3M,
Hewlett Packard, Corning, Dyson, BP and Shell. It does reinforce the need for firms wishing to be innovative to
adopt these characteristics

16. Conclusions
This case illustrates some of the organisational
characteristics that are necessary for innovation to
occur. The unique organisational model seems to work
for W.L. Gore. It is certainly contemporary and does
seem to help to unleash creativity and to foster
teamwork in an entrepreneurial environment that seeks
to provide maximum freedom and support for its
employees (associates). Many of the organisational
characteristics are not, however, unique to W.L. Gore
and there are many other firms where these
characteristics can be found, such as 3M, Hewlett
Packard, Corning, Dyson, BP and Shell. It does
reinforce the need for firms wishing to be innovative to
adopt these characteristics

17. Conclusions
There are several key characteristics that help make the W.L. Gore company
successful, both financially and as a place to work. First, the high- quality
technology and heritage of the firm that encourages an emphasis on developing
superior products. Second, the use of small teams encourages direct one-on-one
communication, this con- tributes to the ability to make timely; informed decisions
and get products to market very quickly.

18. Conclusion
Third, the channels of communications are very open, the lattice
structure allowing all employees the freedom to meet and discuss
pro- jects, situations, concerns and share congratulations with
everyone. Fourth, W.L. Gore believes that providing equity
compensation to its employees establishes a sense of ownership and
increased commitment among its employees. The ASOP program at
W.L. Gore is the majority owner of the company. Fifth, W.L. Gore
provides a comprehensive set of employee benefits and is continually
looking for ways to improve upon what is currently available.
Sometimes that just means re-evaluating what the employees want
and need. Finally, making sure that the individual work groups do not
get too large to be effective is a key element of ‘right-sizing’ for the
company culture. This way W.L. Gore maintains a sense of intimacy
and ease of communications among its work groups.

19. Conclusion
While the employee share ownership sounds attractive,
any decrease in performance and fall in value of the
shares can cause enormous resentment within the firm
as they see the value of their savings decrease. And
unlike publicly listed firms these shareholders cannot
remove the managers. W.L. Gore’s competitors are
varied and diverse: there is no single company which
competes with Gore in every product area. Firms such
as Bayer, Hoecht, Corning, Dow and Du-Pont all
compete in Gore’s product fields: medical, fabric,
industrial and electronic applications.

20. Tutorial 3 questions
1. Explain what happened to the Gore-Tex brand after the patent expired. What activity can firms use
to try to maintain any advantage developed during the patent protection phase?
2. List some of the wide range of products where the Gore-Tex fabric has been applied?
3. It seems that Gore Associates is heavily oriented towards technology; what are some of the
dangers of being too heavily focused on technology?
4. Cooperatives and share-ownership schemes provide many attractions and benefits, but there are
also limitations; discuss these.